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Saturday, April 4, 2015

Weekend Portfolio Analysis (April 4, 2015)

Good morning folks! Glad to be back after 2 weeks without writing an article on this site. Writing today is part of my going back to normality little by little. This is my first post from Hollywood, Florida and what can I say, I'm loving it here: family, sunshine, blue sky, Latin food, hot girls (not that they don't exist in Toronto, it's just that they are too covered up there). I'll miss Canada, but I'm enjoying every minute down here and absorbing the best it has to offer. Heck, how can I be unhappy about hitting what I'm about to hit in the next couple hours?

(You don't need to "click on image to enlarge" in this case. The awesomeness of this view is evident however you watch it)

Thanks for all the concerns, all the support emails and the good wishes. I really appreciate it...

...but this is not "Henrik's travel blog". This is not "adventures of a Cuban on a random beach". This is the site of the Lazy Trader, where we talk about the most exciting and arguably important subject on planet Earth: trading. So, here we go.

Market conditions
The SPX went from 2064.11 to 2066.96 on a shortened week of trading. It almost ended right where it started. However, we should see a gap down come Monday because the /ES futures lost 20 points on Friday due to a disappointing jobs report. Whether the number will be revised or not, whether the economy is getting weaker or not,.....I , I ,..I don't know! and I don't really try to forecast those sorts of things. I only need to know one thing: are we overbought, oversold or in no man's land? That's it!

(Click on image to enlarge)
Stochastics: 29 (neutral)
McClellan: +39 (neutral)
Stocks above their 20 Day moving average: 61% (neutral)

With those numbers and with SPX right around its own 50 Day average, we are in the epicenter of no man's land. In this situation I avoid opening individual credit spreads and prefer to only use Iron Condors. However, I have two of them already on, so no new positions for me. As my next play I would like to enter a Credit spread, but for that I will need a 3% move up or down in the major indexes.

April positions
SPX 1855/1860/2200/2205 unbalanced Iron Condor
2 weeks to expiration and 98% probability of success. This position is going to be a winner. No concerns. For now this is the only April position and it will barely bring a 2% portfolio growth. Nothing spectacular but I gladly take it. I won't force new positions just for the sake of trading.

May positions
RUT 1100/1110/1330/1340 unbalanced Iron Condor
6 weeks to expiration and 82% probability of success. Time decay is now starting to accelerate. This position hasn't given me trouble so far and it looks pretty safe at this point.

Action plan for the week
Existing positions are looking great. The May RUT Iron Condor will only need adjustments this week if RUT hits 1300 or 1160. Both numbers look unlikely with RUT priced at 1255 today. So, I already set up my alerts on the platform and I'm ready to detach my self from the charts knowing it's a low probability event.

As for new trades if SPX goes up to 2120, I will sell a May 2210/2215 Credit Call spread for 0.50 credit or better. The probability of SPX going up that high in a week is remote, but I'm just throwing my idea out there.

If SPX falls down to around 2015 - 2020, I will be a happy seller of the May 1825/1820 Credit Put spread for 0.30 credit or better. I feel this is also an unlikely scenario for just a week. So, overall chances are low that I will add new positions in the next few days.

Economic Calendar
Monday should be pretty exciting in the markets because we will see the reaction to Friday's jobs report when the markets were closed. We also have the Non-manufacturing PMI that day. Other than that it will be a pretty quiet week in terms of economical releases.

Monday: US Ism Non-Manufacturing PMI
Thursday: China CPI

Take it easy, but take it anyways!
You can follow me on Twitter: @lazytrading

Check out 2015 Track record

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  1. Hi LT, haapy to see you back on business.

    I didnt do any trading this week so still got

    April RUY Iron Condor 1340/1350/1110/1100
    April SPX 1840/1850
    May SPX 1840/1850

    Plan for the week : looking to grab an IC on the June cycle

    Tell me that image is not really taken from your room!!

    1. I should tell you that's the view from my apartment just to make you suffer. But I'm a good soul deep down inside. haha. No it is not taken from my apartment.
      Thanks for dropping by man. Good positions.

    2. I really like your positions Bellini.

  2. Hi Henrik,

    Glad you are enjoying Florida. We had a nearly oversold condition on SPX on April Fool's Day when it slipped below 2050. I tried to get filled on June SPX 1770/1760 for .70 to .60 credit but had no luck. I will give it another shot on Monday if we drop below 2050 again.

    What I did last week:


    My plan for next week:

    If we get another oversold condition on SPX, I will sell June SPX 1770/1760 credit put spread.

    Current positions:

    June 30th RUT 1000/990 & 1380/1390 iron condor
    June 30th SPX 1750/1725 credit put spread
    May 31st SPX 1775/1765 credit put spread

    I finished the quarter up 8.4%. It was an easy quarter for most conservative credit spread traders.

    1. Thx for sharing your positions. I was in Cuba so I missed the nearly oversold condition.
      Congrats on your performance so far. You're killing it! On your way to 33% return for the year which is phenomenal. Keep it up.

    2. Thanks my friend. I will be happy with 20% return.

  3. Last two weeks:
    Tuesday 3/24: IC RUT Apr 1050/1070/1320/1340 - the iron condor reached profit target of 3/4 of received credit. I bought to close the whole position for profit +$654 (+9% on margin $7145).

    Thursday 3/26: CAL RUT Apr/May 1230/1270 - after Wednesday when RUT moved down 30 points (-2.3%, -3.6sigma), RUT continued to fall Thursday morning. The double calendar reached my maximum loss 10%. I sold to close the position for loss -$187 (-9% on margin $2132).

    Open positions:
    4x IC RUT May 1070/1090/1330/1350
    4x IC SPX May 1860/1880/2190/2210

    Next week:
    The iron condors in May expiration are still far from my profit targets. I will monitor and adjust them if necessary. Adjustment points are about (1990;2125) for the SPX iron condor and (1170;1280) for the RUT iron condor.

    > Henrik:
    The photo from Florida looks amazing. I have friends that often go to Florida for hollidays. As your family is there with you, you must enjoy the place even more. Nice.

    > Jonathan:
    Monthly options expire on 3rd Friday of given month, e.g. on 20th in May and on 17th in June. Can you clarify the expiration date of your options: SPX May 31st, SPX June 30th, RUT June 30th? Are these extended weeklies? Thanks.

    1. Hi Martin,

      I like your positions. They look great. They are weeklies.

    2. > They are weeklies.
      OK. Thank you.

      > I like your positions. They look great
      They didn't look that great at first. After I put them on, SPX and RUT started gapping up and I was about to adjust them against further upside move. But with the recent pullback in SPX and RUT, the positions now look healthy. Let's see what happens in the following couple of weeks.